The Economics of the FIFA World Cup 2022 in Qatar
The Socceroos have made it to the World Cup! For the fifth time in a row since Germany in 2006. Whilst for European, South American and African nations, soccer or Association football is the sport, in Australia, soccer is only one of 4 codes of football vigorously competing for players, fans and sponsors. Apart from Australia, only in USA, Canada, New Zealand and perhaps India does the national men’s soccer team play second or third fiddle to other national teams, (conversely, in Australia, we expect the Matildas women’s soccer team to be one of the top teams in any tournament) so the Socceroos deserve some respect for qualifying.
Now all eyes are on Qatar. It only has a population of 2 million, has had to build 7 out of 8 stadiums from scratch in order to host the finals, and has itself never qualified for the World Cup. Of course, some of the supporting infrastructure will benefit Qatar well after the tournament is over such as upgrades to Hamad International airport, a light railway, a bridge between Doha and Bahrain, new roads and the new Doha metro as well as the stadia. Some of the stadiums will be dismantled after the Cup and the seats will be donated to developing countries in the Middle East and Africa helping Qatar’s soft diplomacy. Nevertheless, it seems like an enormous economic undertaking. It is estimated that Qatar will spend $200 billion (A$289 billion) in infrastructure to host the World Cup (some estimates are closer to $300 billion or (A$ 433.8 billion).
So why did Qatar want to be the host? It’s partly about prestige. Qatar will be the first Arabic nation to host the World Cup (as well as being the first host country since Italy in 1934 to host the tournament without having played in it). The World Cup is also expected to attract 1.5 million visitors to Qatar, over half its normal population.
But what about the economics? The Qatar authorities predict a contribution to the national economy of around $20 billion (A$28.9 billion) with 1.5 million new jobs created in construction, real estate and hospitality. As many new jobs have been created as tourists are expected, but Qatar has an enormous expat workforce so the benefits will be spread across the MENA region and South Asia and South East Asia as well.
Foreign workers fill 9 in 10 jobs already in Qatar, so much of the job creation will be for guest workers, whose working conditions have already come under scrutiny from the international trade union movement. The World Cup should be an opportunity to make improvements on that score. The tax-fee benefits of Qatar mean there won’t be the tax revenue of past World Cups to the host government.
The IMF predicts Qatar’s economy to grow by 3.4 per cent a year thanks to the World Cup boost but then slow to 1.7 per cent a year by 2024. However, the Russia-Ukraine War has made Qatar a supplier of choice of Liquefied Natural Gas (LNG), which the IMF expects to boost Qatar’s GDP by 3.8 per cent in 2027 when new LNG production comes online.
Will the World Cup benefit Qatar in terms of trade? Qatar is mainly an LNG exporter so the export value of the World Cup will be minimal beyond tourism, but it may be an opportunity to position Qatar as an alternative trade and aviation hub for the region In terms of Foreign Direct Investment (FDI), the blockade of Qatar by the Gulf Co-operation Council (GCC) from 2017 -21 adversely affected FDI so the World Cup has come at an ideal time for Qatar,
Although most studies downplay the effectiveness of one event alone attracting significant FDI, hosting the World Cup is part of a strategy to position Qatar as a long term host of major events – sporting and otherwise. The economic evidence shows that even if one event doesn’t boost FDI substantially, gaining a reputation as a regular host of major global events does boost FDI in the medium term.
So now the Socceroos are in the World Cup, what’s the opportunity for Australia’s trade with Qatar and the Middle East and North Africa (MENA) region? In an interview with the author, Jonathan Muir, Australia’s Ambassador to Qatar, said:
“Most of Australia’s exports to Qatar are food and engineering services that have and will benefit from the hosting of the World Cup. However, after the Cup, I expect investment to be more important especially as Qatar looks to invest globally via its sovereign investment fund. For example, QIA recently took an A$ 1 billion stake (US $691 million in the Sydney Airport consortium, bringing Qatar’s sovereign investment to about A$ 4 billion (US $2.7 million).”
And for Australia and the Socceroos? We have a not-so-secret weapon: Tim Cahill, Australia’s highest ever World Cup Goal scorer and a FIFA World Cup Ambassador. Tim lives in Qatar and will be involved in a lot of Australian Embassy functions, so he’s likely to help us score a lot of goals off the field as well.
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